Could health reform cause almost 1 million people to walk off the job?

By Maryalene LaPonsie on August 18th, 2013

Health reform is giving people new health insurance options and that may mean nearly 1 million workers will leave their jobs. That's according to an analysis conducted by researchers from the University of Chicago, Columbia University and Northwestern University.

The research, published by the University of Chicago Booth School of Business, found 900,000 individuals may choose to stop working once the Patient Protection and Affordable Care Act is fully implemented.

Using Tennessee as a case study

To reach their conclusions, researchers considered how Medicaid eligibility affects the workforce. For real-world data, they looked to Tennessee for an example of what happens when the government cuts off low cost health insurance through Medicaid.

In 2005, approximately 170,000 Tennessee residents lost their health insurance coverage through the TennCare program, in what was one of the largest enrollment roster drops in Medicaid history. In the aftermath, close to half of those who lost their Medicaid coverage went on to find medical insurance through an employer.

"This shows that there are many people out there who look for work simply because they need health insurance. For them, the perk matters more than the paycheck," said Tal Gross, co-author of the paper, in a written statement.

The end of 'employment lock'

Researchers dubbed the phenomenon at work in Tennessee as "employment lock." Individuals who have no other options for low cost health insurance may turn to employment simply to get the coverage they need.

With the implementation of the Patient Protection and Affordable Care Act, the study authors say workers may no longer feel locked into their jobs. Medicaid eligibility is expected to expand in many states, and families earning less than 400 percent of the federal poverty limit will be able to buy subsidized health insurance in all states.

As a result, close to 1 million people may choose to leave the workplace and find their medical insurance elsewhere.

"When the Affordable Care Act is enacted, it's possible that hundreds of thousands of people may choose to leave the labor force or retire earlier than they otherwise would have because they now have access to health insurance outside of their jobs," said Craig Garthwaite, another study co-author, in a written statement.

The study notes the actual impact of the health reform law on employment numbers will vary from state to state. Among other factors, a state's decision regarding whether to expand Medicaid eligibility may have the biggest affect on an individual's decision regarding whether to stay in their job or leave and find health insurance coverage elsewhere.